Nonprofit Contracting Forum CITY & COUNTY OF SAN FRANCISCO Office of the Controller City Performance Unit 11.06.2019
Introduction and Overview 2 Why are we here? Update Coordinate Listen + Learn Ask and answer Share new policy Work together to questions developments improve City services
Updates from the Controller’s Office CITY & COUNTY OF SAN FRANCISCO
Controller’s Office Updates 4 City Investments in Nonprofit Service Providers FY 2018 - 2019 $822 million In City payments to nonprofits 26 City 621 Nonprofits Departments 134 19 $ 163k Median Nonprofits Nonprofits amount received more received more received than $1m than $10m
Controller’s Office Updates 5 Citywide Nonprofit Monitoring and Capacity Building Program Progr gram am Ove Overview view Consolidates contract monitoring requirements to promote efficient monitoring that uses consistent standards and methods Progr gram am Goal als Public funds are spent in alignment with the City’s financial and administrative • standards Nonprofit contractors have strong, sustainable fiscal operations • 12 Departments Jointly Funded 165 Nonprofit Contractors in the Program The 165 contractors received 71% of City funding for all nonprofits Monit itoring ring Fi Findings dings 108 Nonprofits were in Conformance 76% of contractors ended the cycle in full conformance with standards, though this decreased this year
Controller’s Office Updates 6 Citywide Nonprofit Monitoring and Capacity Building Program What’s new for FY20? Expanded New Risk 109 09 nonprofits financial Assessment to be management process to monitored in coaching and include more FY20 training services nuanced factors 25% reduction for nonprofits in determining from FY19 using what level of new Risk monitoring to Assessment employ. process
Controller’s Office Updates 7 Minimum Compensation Ordinance (MCO) Ove Overvi view ew of M f MCO ▪ Covers most City contractors ▪ MCO wage increased to $16.50 per hour in July 2019 for nonprofit suppliers New ew MCO O wag age ap e appl plies ies to n nonpr profit fit sup uppl plier ier wit ith: $50k or more in funding 5 or more from at least 1 funding employees department ▪ City appropriated $5 $5.8 mi 8 million llion to help nonprofits offset MCO related costs ▪ The Controller’s Office managed an application process to allocate the funds
Controller’s Office Updates 8 Minimum Compensation Ordinance (MCO) App pplicat lication P ion Proces cess Application Period ▪ 181 81 application ▪ 4,26 263 FTEs June – August 2019 reported, submitted earning up to ▪ 21 210 unique $30/hr suppliers Res esults ults $3.80 million ion $2.76 million ion Wage ge increases eases for r 2,757 FTEs TEs For r co comp mpac action ion co costs For r direct ct co costs up up to $22.50/ 50/hr hr Representing ng 1, 1,031 1 FTEs TEs
Controller’s Office Updates 9 Minimum Compensation Ordinance (MCO) Di Distr tribution ibution of F f Fun unds ds ▪ Departments will begin initiating contract amendments or modifications immediately. ▪ The Controller’s Office has advised departments to finalize pending contract certifications prior to making adjustments for MCO. ▪ Nonprofits who receive MCO allocations should adjust FY19-20 contract budgets to ensure all wages are at least $16.50/hr and to make other necessary wage adjustments to address compaction pressures. Adjustments should reflect wages as of July 1, 2019. ▪ Allocations include 20% overhead to address variable fringe and other costs. Fo For FY FY20 20- 21… ▪ Departments and nonprofits should incorporate discussions of MCO increases into normal contract amendment processes.
Controller’s Office Updates 10 Cost Categorization in Nonprofit Contracts and Grants Ove Overvi view ew ▪ In January 2019, Controller’s Office reissued guidance on the treatment and allowability of direct and indirect costs in City grants and contracts with nonprofit service providers. ▪ Guidance should be adopted by departments in current contracts and grants. ▪ Questions arise about interpretation of the guidance, and certain issues must always be addressed case-by- case. The Controller’s Office may update the guidance annually as needed. Li Link to g gui uidance: dance: ▪ https://sfcontroller.org/sites/default/files/Documents/Auditing/Guideli nes%20for%20Cost%20Categorization%20in%20Nonprofit%20Contrac ts%20and%20Grants%20Version%201.2.pdf Ple leas ase e ad addr dres ess qu ques estio tions ns to: ▪ Francisco.Alvarado@sfgov.org
Controller’s Office Updates 11 Indirect Rates Bac ackgr ground: ound: ▪ The Mayor’s Nonprofit Working Group of FY16 -17 identified the limitations of a flat indirect cost rate (typically 12-15%) applied to nonprofit contracts and grants. This rate often does not support nonprofits to cover the actual • costs of administering City-funded programs. ▪ The Controller’s Office facilitated a process during FY18 -19 to develop new proposals for how the City could treat indirect costs in nonprofit contracts and grants. Controller’s Office met with : • 8 City Departments • 26 26 Nonprofit Organizations • 71 71 Total Individuals
Controller’s Office Updates 12 Indirect Rates This collaborative process resulted in three proposals: Op Opti tion n 3: 3: Op Opti tion n 2: 2: Op Opti tion n 1: Cit ityw ywide ide De Depar artment tment-wide wide Sta tandar dardized Ra dized Rate Neg egotiat tiated ed Ra Rate Neg egotiat tiated ed Ra Rate • Fully-negotiated, • Standard rate with cap • Negotiated rate that Citywide rate that applies to all contracts applies to all contracts for each department regardless of department or funding source Next ext Step eps: ▪ The Controller’s Office will work with City departments to pilot a model in advance of Citywide adoption.
Controller’s Office Updates 13 Other Policy Development Underway ▪ The Controller’s Office is helping standardize how departments work with nonprofit contractors and ease requirements when not explicitly necessary e.g. by a funding source. Policy Ar licy Area eas Un Unde der R r Revie eview: w: Budget Flexibility Audit Requirements Advance Payments Invoice Review • Issue – • Issue – • Issue – • Issue – Departments have Departments have Advances are Department have differing policies for applied inconsistent and varying thresholds extensive when they require a inconsistently for when and how across City documentation nonprofit to budget amounts conduct an audit or departments review processes can be adjusted which may not be financial review between line items required by funding during invoicing sources Next ext Step eps: ▪ The Controller’s Office will continue to assess and revise City policy in consultation with City Departments. ▪ Updates will be offered during a future Nonprofit Policy Forum.
Updates from the Mayor’s Office CITY & COUNTY OF SAN FRANCISCO
The FY 2019-20 & FY 2020-21 budget prioritized investments to help strengthen the social safety net including increasing support for nonprofit providers • CBO Cost of Doing Business (CODB) • 3% in FY 2019-20 - 0.5% increase from what was previously budgeted • 2.5% assumed for FY 2020-21 • Minimum Compensation Ordinance (MCO) to support non-profit workers and IHSS workers • Nonprofit Sustainability Initiative (NSI) investment to help keep nonprofits in San Francisco • Additional $2 million in FY 2019-20; total of $8 million over the next two years Mayor’s Office of Public Policy and Finance 15 City and County of San Francisco
Departmental Updates CITY & COUNTY OF SAN FRANCISCO
Office of Economic and Workforce Development (OEWD) CITY & COUNTY OF SAN FRANCISCO
Available Offerings: OEWD One-stop Navigation Capacity Assistance & Consultation Real Estate Assistance Pro Bono & Professional Service Referral
ONE-STOP NAVIGATION The Office of Economic and Workforce Development provides access to an array of resources, tailored to the needs of each organizations, as well as training and education referrals suited to the needs of nonprofits providing arts access, legal aid, human services, workforce development and other resources.121 organizations received direct assistance in Fiscal Year 2018-19. Direct Assistance: Examples Starting a Nonprofit Fund Development Organizational Assessment
ORGANIZATIONAL EFFECTIVENESS PARTNERS The Office of Economic and Workforce Development supports intermediaries to provide services in support of organizational diagnostic assessment, strategic restructuring, fund development and real estate readiness.
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